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The Obama Administration threatened what could be described as diplomatic and economic sanctions against the Palestinians if their leader, Mahmoud Abbas, goes through with his own threat to dismantle the Palestinian Authority.

Abbas hinted at such a move in an interview last week with Egyptian media, complaining that Israel’s unwillingness to meet 100 percent of Palestinian demands meant a two-state solution was increasingly unlikely.

Over the weekend, Palestinian officials told Israeli media that Abbas and his senior aides were considering canceling the “Oslo Accords” and dismantling the Palestinian Authority, a move that would make Israel directly responsible for all Palestinian Arabs and dangerously tip local demographic figures.

It is not the first time Abbas has threatened to shut down the PA and cancel existing peace agreements with Israel.

“Of course [the PA disbanding] will have serious consequences,” US State Department spokesperson Jen Psaki told reporters. “Obviously, this is not in the interest of the Palestinian people, and all that has been achieved will be lost.”

Psaki continued by noting that “a great deal of effort has gone into building Palestinian institutions by Palestinians as well as the international community, and it would certainly not be in the interests of the Palestinian people for all of that to be lost. We - the United States - has put millions of dollars into this effort. It would obviously have very serious implications for our relationship, including our assistance going forward.”

Veteran Palestinian politician Qadura Fares told Israel’s Army Radio that the Palestinian Authority was largely unconcerned by the American threat. But a day later, senior Palestinian negotiator Saeb Erekat belied that notion, insisting that reports of the PA’s imminent demise were an “Israeli ploy.”

“No Palestinian is speaking of an initiative to dismantle the Palestinian Authority,” Erekat claimed in remarks to the AFP.

Netanyahu, meanwhile, took the opportunity to criticize the Palestinian leadership, saying that threats to quit the peace process were indicative of the true intentions of the Palestinian Authority.

“Today, we saw the Palestinian Authority speak of dismantling itself and also talking about unity with Hamas,” Netanyahu told attendees at a post-Passover celebration. “They should decide - either dissolve, or enter into a union with Hamas. When they want peace, they should let us know. Because we want a genuine peace.”

With only seven days to go until the April 29 deadline for the current US-brokered peace talks, Psaki said that her boss, US Secretary of State John Kerry, has no plans for yet another last-minute mission to the region to save the failing negotiations.

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